California’s “big three” utilities, at the behest of state regulators, are in the process of examining and improving how they price electricity, including something called time-of-use (TOU) electricity pricing. This option – which rewards people who shift some of their electricity use to times of day when clean energy is abundant and electricity is cheaper – can help California families create safer communities while saving money on their utility bills. Mom’s Clean Air Force California mom Linda Hutchins-Knowles agrees, and recently wrote this opinion piece in the San Jose Mercury News encouraging others to adopt TOU.

Linda, like many moms, wears multiple hats. As a mother, she wants to help leave her children a safer, more sustainable word. As an advocate, she supports increasing our use of clean energy over dirty fossil fuels to help clean our air and environment as a whole. Finally, as a consumer, she wants to do these things without breaking the bank.

This is where TOU electricity pricing comes in. As Linda notes, Californians will soon have the opportunity to adopt TOU when Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric transition all residential customer to this program in 2019 – with the option to opt-out for those who prefer tiered rates (the option currently in place for these customers). This will improve the resiliency of the electric grid and optimize the use of California’s growing clean energy resources. To illustrate how, she uses the example of California’s ample and growing solar power resources. The state currently produces so much solar energy, sometimes it produces more than it can use. Under TOU, electricity will cost less when this resources is abundant, incentivizing people to use energy during that time.

To get the most out of this tool, Linda rightly illuminates that just as California families and residents are diverse, their electricity pricing options should reflect their different needs. This is why she calls for utilities to create options that fit for tech-savvy Bay Area and Silicon Valley customers and people who already use tools to manage their energy use like smart thermostats.

These options, paired with effort from the utilities to empower all of their customers – including elderly and low-income Californians – by studying how their bills may be impacted, will ensure this program is successful for everyone. Environmental Defense Fund will also be busy in the coming months advocating for a menu of varied pricing options. Ensuring the utilities inspire the use of new technologies and empower those who already use energy management technologies (like smart thermostats) to shift their use will also be part of our strategy.

In late December, while most people were on holiday, the utilities submitted plans to the California Public Utilities Commission (CPUC) to assess electricity prices that vary with the season and time of day. These plans detail the next two years of piloting time-of-use (TOU) pricing for most residential customers, and will help California reduce pollution and increase renewable energy production.

TOU electricity rates reward customers who shift energy use to times of the day when clean energy – like wind and solar – is plentiful, and electricity is cheaper. Already in use by commercial and industrial customers, starting in 2019, California households served by the big 3 utilities will also be able to benefit from TOU pricing. By shifting their energy use to times of the day when electricity is cleaner and cheaper, customers will be empowered to lower their monthly electricity bills and use more of California’s abundant, renewable energy resources.

Meanwhile, the utilities will have the next three years to fine tune their TOU strategy by analyzing these pilots, with the goal of achieving customer understanding and satisfaction through outreach, education, and new technology.

These plans are a great start, but there is still an opportunity to refine them. Doing so will ensure Californians are well-positioned to successfully transition to TOU pricing in 2019.

What the plans get right

Each utility will evaluate three different electricity rate designs across a broad sampling of customers, setting the stage for scientifically rigorous pilots.

The first rate, roughly speaking, is most similar to the TOU rates currently offered by the big three utilities.

The second rate’s peak, or highest, price window is shorter and rewards customers who increase their energy use when solar power is plentiful (usually between 11 AM and 3 PM).

The third rate is intended to provide the sharpest incentive for customers to use electricity from clean, renewable sources. This rate has the highest peak price, but customers benefit the most with this option from shifting or lowering energy use – by using strategies and enabling technologies such as home batteries, energy efficiency, and smart thermostats.

Finally, each utility proposes to test how customers interact with technologies. SCE and SDG&E will examine how customers use smart thermostats and PG&E will test a smart phone app.

SDG&E's third rate has many attributes Environmental Defense Fund (EDF) endorses, including hourly price changes to reflect the near-real-time cost of electricity. Furthermore, this rate will provide a bill credit when electricity from solar plants, for example, is so plentiful that the cost of electricity goes down. The bill credit is yet another way to incentivize people to use electricity when there is ample clean energy available, making it easier for the state to rely more and more on these renewable sources. EDF submitted letters to the CPUC encouraging PG&E and SCE to adopt a third rate in their pilots reflecting what SDG&E is piloting because we believe it best matches the type of pricing system California needs to green the electric grid.

The evaluation plans laid out by SDG&E and SCE clearly list what objectives will be met in the next two years of pilots, and what will be done in the 2018 pilot when utilities can explore a process for automatically transitioning customers to TOU pricing. Their plans correctly emphasize studying how customers change their energy use when switched to TOU pricing and how these changes translate into utility bill changes and satisfaction. However, EDF sees additional opportunities for the utilities to make these plans stronger and more ambitious.

How the plans can be stronger

The state’s TOU objectives include offering Californian’s a broad menu of quality options. Here are three ways the pilots can better achieve this goal:

Testing clear customer options. Not all of the electricity rates proposed by SCE and PG&E provide significant electricity price differences between times of day. The pilots should look at a greater diversity of TOU rates, as different combinations will work better for different people. If all of the rates offered are too similar, people won’t be able to distinguish between them. This confusion will likely result in customers not shifting their energy use to align with times when renewable energy is available – one of the main benefits of TOU electricity pricing.

Inspiring use of new technologies. The pilots should determine how to inspire people to adopt technologies that can shift electricity use automatically when the electric grid is stressed, or turn on routinely during times when clean energy is abundant. By studying this focus group, the utilities could gain insights into how they might motivate others to adopt similar tools. SCE and PG&E could be more ambitious in this moment of testing. Comparatively, SDG&E has the right ambition and focus in their third pilot rate, but proposes a $40 per month fixed charge that may undercut the financial benefits customers can receive with TOU electricity pricing. EDF recommends SDG&E test a demand charge, which instead of adding a fixed amount to the utility bill each month, adds a fee based on the customer’s peak electricity use. While the demand charge may seem at first to have the same effect as a fixed charge, it can be avoided. Practices and technologies, such as automated demand response that, for example, dims lights and slows fans in coordination rather than incur peak demand charges, can make this option more beneficial to customers.

Taking advantage of technology. PG&E’s plan in particular misses another critical opening to unlock the full potential of technologies like smart thermostats and home batteries. Instead of testing how people buy and use technologies and, in turn, how this impacts their utility bills and satisfaction when paired with TOU electricity pricing, PG&E is choosing to focus only on qualitative aspects of smart thermostat use. Furthermore, all three utilities could synch their technology treatments with concurrent efforts at the CPUC such as the Distribution Resources Plan proceeding and Vehicle Grid Integration

Setting the stage for success

As I’ve written elsewhere, TOU electricity rates provide numerous benefits, one of which is putting all of our clean energy to use.

EDF and others are working to ensure the TOU pilots are designed to provide utilities and Californians with the information necessary for the program’s eventual success. Namely, to establish the electricity rates we need to help California build a clean, affordable, and reliable energy system.

As any child of the ’80s knows, October 21, 2015 is “Back to the Future Day” – the day that the film’s protagonist, Marty McFly, travels to the future in his DeLorean. Though it would no doubt be useful to have access to flying cars (think of the traffic one could avoid), Californians are seeing increased access to something more practical: electric vehicles (EVs).

In order to meet the state’s greenhouse gas (GHG) reduction goals, emissions from transportation – the sector most responsible for harmful pollution – need to be addressed. Enter Governor Brown’s zero-emission vehicle (ZEV) mandate, which aims to build enough infrastructure statewide to support one million clean vehicles by 2020, and put 1.5 million ZEVs on the road by 2025. With this executive order, we have a much better chance of ensuring a low-carbon future and effectively combatting climate change in California.

If we build it, they will come

To have a decent shot at meeting the governor’s goals, the state needs to start with charging infrastructure. Despite evolving battery technology, range anxiety is still one of the top deterrents for would-be EV buyers. So, putting more charging stations where drivers are likely to need them will help grow the market for these clean vehicles.

Thankfully, the California Public Utilities Commission (CPUC) issued two proposed decisions on December 15th and December 23rd, giving Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E) the opportunity to move forward with plans to increase charging infrastructure in their respective service territories. These decisions include modifications to the utilities’ original proposals – and SDG&E must still decide whether or not to accept the Commission’s modifications – but they nevertheless represent an important step in the journey to getting more EVs on the road.

Importantly, under these programs, SDG&E and SCE propose to grow the electric vehicles market in an intelligent way, by focusing on the following areas:

Charging stations at multi-unit dwellings and workplaces. Currently underserved in terms of charging infrastructure, it makes good sense for the utilities to focus on these areas. In addition, making workplaces a focal point helps to ensure EVs are charging at times when there is an abundance of solar on the electric grid (typically between the hours of 11 AM – 3 PM, when solar panels are most productive).

EVs as grid-balancing resources. Both SDG&E and SCE offer provisions in their programs that endeavor to discourage EV owners from charging at times of “peak,” or high energy demand, instead encouraging them to charge when renewable energy is plentiful. Of particular note, SDG&E includes a dynamic electricity tariff that, with the addition of a smartphone app, gives drivers an easy way to identify the cheapest – and most grid-beneficial – times to charge.

Disadvantaged communities. Both SDG&E and SCE specifically set aside a percentage of charging stations for disadvantaged communities. In doing so, they are including a key demographic that is all too often overlooked. By helping increase the reach of EVs in communities that consistently suffer disproportionate impacts from pollution, the utilities can ensure the benefits of EVs have a much broader reach than they otherwise might.

More EVs mean more benefits for California

More charging infrastructure will lead to a bigger EV market, which will in turn lead to cleaner transportation for many Californians. More specifically, broader EV adoption can do the following, if these vehicles are deployed properly:

Cut down on greenhouse gas emissions. Because EVs, unlike their fossil-fueled counterparts, do not produce combustion emissions, they can significantly cut down on harmful pollution. That being said, it is also critical to know how the electricity powering these cars is produced. Charging at times when there is an abundance of solar or wind available means EVs are powered by clean energy resources, and not by fossil fuel power plants.

Store renewable energy. Cars that charge in the middle of the day or late at night can store renewable energy. Therefore, even if people don’t use this clean power immediately, they can draw on it when the sun sets or the wind isn’t blowing. In this way, Californians avoid the need to rely on natural gas power plants that are often deployed at peak times – namely, in the early evening hours.

Enhance electric grid reliability. In order for the electrical grid to be stable, supply has to roughly equal demand. However, there are times when there is an over-generation of solar, which leads to a surplus of supply relative to demand. This creates the potential for reliability concerns, as well as the possibility of fossil fuel power plants to quickly ramp up electricity production. By acting as a storage device in times of renewable over-generation, EVs can soak up excess renewable energy and head off these concerns.

EDF is excited that the Commission has left the door open for SDG&E and SCE to move forward with modified versions of these critical and well-thought-out programs. This green light will go a long way towards building a more sustainable and cleaner California. Now if only Tesla would help fulfill the fantasy of Millennials everywhere and come out with that flying car.

]]>http://blogs.edf.org/californiadream/2015/12/28/in-california-electric-vehicles-are-the-new-delorean-in-back-to-the-future/feed/3http://blogs.edf.org/californiadream/2015/12/28/in-california-electric-vehicles-are-the-new-delorean-in-back-to-the-future/Local Solar can be good for all Neighborhoodshttp://feedproxy.google.com/~r/CaliforniaDreamCleanEnergy/~3/s5cytZDiODc/
http://blogs.edf.org/californiadream/2015/11/18/local-solar-can-be-good-for-all-neighborhoods/#commentsWed, 18 Nov 2015 20:30:26 +0000http://blogs.edf.org/californiadream/?p=5089By Jorge Madrid

Solar power in California has, in many ways, been an unparalleled success: the state has more solar power installed than the rest of the country combined. There are more solar workers in California (55,000) than working actors or utility workers. Solar workers earn a higher than average wage, and the industry is making strides in employing more women, veterans, and people of color. And, the median income of households installing solar in California in 2012 was between $40,000-$50,000, mostly middle- and working-class homeowners.

But there are two sides to this story because, unfortunately, solar power is still inaccessible to many low-income households.

Take my neighborhood of Boyle Heights, on the east side of Los Angeles, for example: over 70 percent of residents are renters and cannot install solar on roofs they don't own. For those who do own their homes, many can't afford to purchase their own solar system (the median income is just over $33,000) or don’t qualify for traditional financing. Residents here have captured a paltry $0.33 per capita in solar incentives over the past 15 years, as compared to Bel Air (yup, that Bel Air) which received almost $200 in solar incentives per capita – over 600 times more than Boyle Heights.

This isn’t completely unexpected as early adopters of technology typically have more discretionary income. It does, however, paint a stark picture of communities who have vs. those who have not.

Further, this is the case in many communities throughout the country: the 49.1 million households that earn less than $40,000 of income per year make up 40 percent of all U.S. households, but account for less than five percent of solar installations.

Solar Crossroads in California

The solar industry is at a crossroads in California, with the state’s utility commission deliberating on changes to its “net metering” policy. This practice allows customers to send the electricity they produce from their solar systems back to the grid and receive a credit on their bill. As part of the debate on net metering, the commission is considering new charges for solar customers – utilities argue these are needed to ensure everyone pays their fair share of “grid services” (transmission lines, maintenance, etc.).

Some say these charges would kill the industry by making it more expensive to own solar. If implemented, these changes could increase the average electricity bill for those with rooftop arrays from $65 per month to $135. A report from UC Berkeley found the proposal could “throttle demand” and “significantly, negatively affect rooftop solar adoption rates.” Similar fights are happening in other states that experienced early waves of solar success, like Arizona, where installations of local solar dropped 95 percent after similar charges were introduced.

At the center of many of these debates are the cost impacts to low-income communities, communities of color, and other vulnerable populations like seniors and fixed-income households. This is an extremely important issue, as these populations spend a greater portion of their income on utility bills and are more burdened by price spikes.

As I’ve written before, this concern is frequently used as an argument against clean energy. Sometimes these arguments come from elected officials and advocates with genuine concerns. While other times they come from industry or other groups who seem to be protecting their own interests: a 2014 study found local solar will have significant impacts on utility shareholder profits – up to a 40 percent loss for some.

It’s clear this dialogue needs some clarity, and also some soul searching. Solar power can be an asset for low-income communities, renters, and other vulnerable populations – but it’s not completely there yet. We need to continue to push the industry, the utility sector, and policymakers to make solar accessible to everyone, especially low-income communities. Anything less would be a squandered opportunity to do something truly revolutionary.

Not an unfair cost burden, likely an asset

On the question of cost impacts: analysis from the Lawrence Berkeley National Laboratory found even the most aggressive net metering solar programs they studied would have nominal (0.1-2.7 percent) impact on electricity rates. Similar analysis from California, Nevada, and Mississippi public utility commissions found solar customers on average cover their full costs to the electric grid and provide a net benefit to all customers.

For example, rooftop solar offsets the need for “peaker plants” – polluting, expensive, fossil-fueled power plants that are only used a handful of hours a year to meet spikes in demand (like during a heatwave). Consequently, folks living near the polluting power plant who get their electricity from solar will enjoy cleaner air, and all customers will enjoy lower bills now that the peaker plant is needed less frequently.

In short, low-income communities are not in danger of being harmed by local solar power. In fact, they have the opportunity to capture multiple benefits from local solar power like good jobs, cleaner air, and more stable and affordable utility bills. But the next, more important question is how to reach the vast, untapped market of households who have not yet been able to access local solar?

Lower Costs and Better Programs

We’ve got reason for optimism that the benefits of clean, local, affordable energy can and will reach all neighborhoods and community members.

The cost of rooftop solar has dropped exponentially in the last decade, and is expected to continue dropping 61 percent by 2030. This, and programs that improve financing can keep solar within reach of middle class homeowners. But we can and must go further.

In California we have programs to provide no-cost solar on low-income homes, and groups like GRID Alternatives who have installed almost 6,000 solar systems on low-income homes in the state. New York is rolling out a program that doubles the incentives for solar projects on low-income homes, expected to support between 2,500 and 4,500 new residential projects.

Community solar is another way to make clean energy more accessible to renters and low-income households by eliminating the need for the upfront purchase or financing of a rooftop system. Utilities or a third party (like a non-profit or co-op) cover the cost of building a larger, shared-system in a neighborhood, which local residents can subscribe to. A community-sized solar system (around one megawatt or enough to fully power 250 California homes) can be 40 percent cheaper than a single home-sized system.

Significant decrease in costs, coupled with the continuation of proven policies like net metering, as well as meaningful programs like the ones listed above, could generate more local, equitably-distributed solar in communities all over the U.S.

Let the sunshine IN

Local solar power is at a decisive moment in California and throughout the country. Solar has been a bright spot for the economy, the environment, and people who have benefitted from programs to help alleviate barriers to access. However, the benefits have not been fully realized by large segments of our society.

California’s existing policies helped usher in the first wave of the solar revolution – now it’s time to push forward, not back. Changes to these policies being considered in California and many other states should not hurt current solar customers or make it unreasonably difficult for new customers to go solar. We need to ensure solar reaches new markets and diverse communities, especially those who could stand to benefit most.

“When the connection was finally made the Union Pacific and the Central Pacific engineers ran their engines up until their pilots touched. Then the engineers shook hands and had their pictures taken and each broke a bottle of champagne on the pilot of the other's engine and had their picture taken again.”

– Alexander Topence on the scene in Promontory, Utah in 1869 after Western governors drove the “last spike” of the Transcontinental Railroad.

These are good times for clean energy in California. A decade of visionary policymaking, a motivated private sector, and copious sunshine have joined together to reduce the cost of solar in the Golden State by 90 percent.

We already produce more solar energy than any other state. And thanks to a new law Governor Jerry Brown signed last month, SB 350 (De León), California has committed itself to yet another ambitious clean energy goal: 50 percent of electricity in the nation’s most populous state will come from renewables by 2030. Solar is a central part, among others, of California’s strategy to meet this new target.

Amid all this optimism, fast solar growth poses challenges as well. A lot of it has to do with timing.

Timing is not always on solar’s side

Source: California ISO Daily Renewables Watch for October 28, 2015

The California Independent System Operator (ISO), the agency in charge of operating the state’s electric grid, keeps track of electricity production and demand.

This is what the renewable energy supply picture looked like on a recent October day. The golden bell curve represents solar generation. On that day, solar energy production peaked at 12:46 PM.

But energy demand didn’t peak until four hours later, at 6:46 PM, when people started coming home from work and school, and turning on their devices as the sun was beginning to set. The solar supply curve is out of synch with the way Californians use energy.

Increasingly, the ISO is finding that solar generation in California is so high during the daytime hours that we are unable to use all of it. The agency calls this excess, unused renewable energy supply “curtailment.” Its analysis suggests that if the state had adopted a target of 40 percent renewables by 2030 then some 15 percent of the incremental increased capacity would be curtailed, or essentially wasted.

Well, Californians could change the way we consume energy. In fact, Environmental Defense Fund (EDF) helped utilities and the California Public Utilities Commission develop time-of-use pricing. This innovative pricing mechanism rewards people who shift some of their electricity use to times of day when clean resources are available and electricity is cheaper, bringing supply and demand into closer alignment. Better energy storage options coming to market soon will help too.

But there’s another step we should take that will help on a massive scale and speed the transition to clean energy in other states. It’s time to link the ISO with other grid systems in the West, like PacifiCorp, which delivers 70 million megawatt-hours of power per year to 1.8 million customers in six states (California, Idaho, Oregon, Utah, Washington, and Wyoming).

Linking the ISO with PacifiCorp is a win-win for customers in both networks. For California, it provides a market for millions of megawatts of excess solar generation (in red), which would otherwise be wasted.

Source: Energy and Environmental Economics, Inc.

For PacifiCorp, where states are grappling with how to reduce carbon emissions under the federal Clean Power Plan, imports of low-cost, California solar could allow them to replace dirty energy supplies while still meeting customer demand.

Source: Energy and Environmental Economics, Inc.

What’s more, there are financial benefits for customers in both networks. Over 20 years, Energy and Environmental Economics estimated that ISO and PacifiCorp customers would see savings of $3.4 to $9.1 billion. Meanwhile, workers will benefit from new jobs and opportunity in a solar industry that can continue to grow.

Avoiding concerns

So what are the concerns? There are a few, but we can take reasonable steps to avoid them. Let’s look at some of the biggest ones:

Electric grid stability. Californians remember the Enron collapse and rolling blackouts of 2000-2001. We learned a lot from those times about the risks of unfettered deregulation. Our stable and reliable electric grid today is a product of our recovery from those dark days. While grids in other regions have joined together, Californians have, understandably, wanted to go slowly and get it right. As we link up with other states we need to make sure we follow the lessons learned from other regional balancing areas and don’t replicate the mistakes of the past. Furthermore, joining markets with other states will actually enhance stability in California, ensuring we have access to resources we need for the times when heat waves, disasters, or other forces cause our demand to exceed supply.

Keep dirty coal out. Californians have made it abundantly clear: we want clean energy. Some other western states have more dirty energy in their mix. Our goal in uniting grids is to expand access to clean energy in those places. The expectation is that more clean energy will lower its cost and reduce demand for dirty energy everywhere. The evidence to date from eight months of operating an energy imbalance market with PacifiCorp shows coal sales represent less than 0.05 percent of dispatch. This data suggests coal imports would be minimal in this newly constructed market. But just in case, we need to structure the linked market to make sure no significant amounts of dirty energy inadvertently enter California.

We think these hurdles are surmountable. Done right, the customer, business, and environmental opportunities of joining forces are too good to pass up.

Just like the engineers and politicians who met in Promontory 146 years ago, it’s time for us to drive the “last spike” for energy security, and recognize again that when states and people work together, everyone benefits. All aboard!

Electricity regulators, clean energy innovators, and rappers have all lamented poor communication. And some have pushed for cleaner, cheaper, more reliable solutions for meeting our energy needs. This is particularly so with the much anticipated emergence of a new kind of non-event based, price-responsive demand response (DR), or flexible DR.

Whereas traditional DR signals customers to voluntarily and temporarily reduce their energy use at times when the electric grid is stressed, this type of DR does that and more. The big difference? It signals customers, their appliances, and their electric vehicles to increase their energy use when electricity is clean, plentiful, and cheap.

For example, electric vehicles can be programmed to charge at mid-day when the sun is bright and solar energy is at its peak, and use that stored energy when the sun sets. Better yet, many of our cars, homes, and appliances can be programmed to monitor grid conditions in real time, via the Internet, and respond accordingly by charging or defecting. Also known as a “set-it-and-forget-it” feature, this function enables the seamless integration of flexible DR while also supporting the full potential of energy efficiency measures and distributed energy resources (DERs), like rooftop solar and energy storage.

The seamless and stealth nature of this type of DR, which can be largely automated by tools and service providers, is something neither the customer nor the utility have to think about. It’s like a secret agent, operating behind walls and wires to find the greatest energy (and cost) saving-potential. Regulators need to unleash this “secret agent DR” by rewarding it fairly and efficiently in the energy marketplace, giving it a “license to thrill” in households and businesses across California.

Flexible demand response delivers serious benefits

The good news is, this innovative form of DR aligns with times of the day when electricity is cheap and demand is high. That is, solar and wind will be plentiful at times when customers generally desire to use energy. This element of flexible DR brings some serious benefits to California’s electric grid, environment, and people, including its ability to:

Decarbonize California’s electric grid. By helping to shift demand to times of day when clean energy is plentiful, California can rely more on low-carbon resources and less on dirty ones. This is increasingly important as California adds more electric vehicles to its roads, and thus more demand to the electric grid.

Provide a new form of flexible resource. The successful growth of wind and solar energy means grid reliability management is expanding from a focus on periods of “peak,” or high demand, to flexible demand. Flexibility refers to the need to better align electricity usage with renewable energy, while avoiding increases in energy demand when those resources are not available. This new iteration of DR constitutes an innovative form of flexible resource that is still new to grid planners, but has great promise for complementing other clean energy solutions, like utility-scale renewable resources. A recent study by the Rocky Mountain Institute (RMI) finds that, “residential use of a smart thermostat and a water heater timer for flexiwatt consumption is calculated to save U.S. utilities 8 percent of their heat-oriented generation, worth about $13.3 billion per year.”

Empower people to be more comfortable. One example of a new kind of technology which is able to perform this kind of DR is the Nest thermostat. A recent study of Nest users across 41 states found people save about 10-12 percent in heating and about 15 percent in cooling with most participants, “feeling more comfortable after the Nest Learning Thermostat was installed.” This shows this is also a strategy that will empower energy users to be more comfortable.

Putting this exciting approach to work

In addition to recognizing its many benefits, we need to figure out how best to implement this flexible DR.

One way is for the managers of the electric grid to start planning for it. They can do this by including it in their forecasts of energy demand. This includes representing flexible DR in the California Energy Commission’s (CEC)Integrated Energy Policy Report, an annual report of trends and issues related to energy that the CEC presents to the governor and the California State Legislature. Based on this report, the legislature should enact policy to realize its potential. As the saying goes, “If we don’t plan on where we’re going, we’re likely to end up someplace else.”

When combined with other things like new electricity pricing mechanisms in California, this people-powered solution will become routine and commonplace. It will help the state get the best possible value from solar and wind while avoiding additional stress on the electric grid during times of peak demand or other grid constraints. As California aims to achieve ambitious renewable energy targets, this will be yet another powerful tool to build the state’s clean energy future.

To learn more about non-event based, price-responsive demand response (DR), or flexible DR, Jamie Fine will be describing this great opportunity in more detail during a presentation at the DR World Forum in Costa Mesa, October 6-7.

As California races towards a clean energy future, not only do we need new aggressive goals for all sectors, but we also need to rethink how we manage distributed energy resources, like rooftop solar and customer side energy storage. This is particularly true for one such resource, energy efficiency.

Two weeks ago, the California legislature passed a number of clean energy related bills including SB 350 (De León), a bill that sets the state on a path to achieve Governor Brown's ambitious clean energy goals. The governor’s “50/50/50” plan aims to increase electricity from renewable sources to 50 percent, reduce petroleum use by 50 percent, and double building efficiency by 2030.

Not only does the bill essentially double California's energy efficiency goals, it does so by making a number of crucial changes in how we approach energy efficiency in the state. These changes, if implemented, represent the beginnings of a major paradigm shift for this clean energy resource.

Changes to how California defines and measures energy efficiency

First, SB 350 fundamentally changes the way energy efficiency is measured in California. Traditionally, regulators rely on a series of after-the-fact studies, including regulation which considers energy code and attempts to account for a number of subjective impacts. SB 350 on the other hand, is clear that “energy efficiency savings and demand reduction reported…shall be measured taking into consideration the overall reduction in normalized metered electricity and natural gas consumption.” This removes much of the subjectivity from measuring energy efficiency by taking a more holistic look at electricity and gas-use reductions.

This is a huge shift from current practices. It promises to standardize how energy efficiency is measured based on meter data and evaluate its performance based on straight reductions in energy demand. More importantly, it has the potential to finally put in place a standardized and replicable system for measuring energy efficiency as a source of electricity available to the grid. In doing so, markets can treat energy efficiency as a reliable energy commodity.

The bill also directs the California Public Utilities Commission (CPUC) “achieve greater energy efficiency in existing residential and nonresidential structures that fall significantly below the current standards in Title 24 of the California Code of Regulations.” In essence, this definition places importance on what results show at the meter, not how a given customer gets there. Further, it defines those results as the difference between the buildings’ baseline use before energy efficiency interventions, and consumption during the performance period of the retrofits or upgrades.

Building on this data driven approach to measuring energy savings, SB 350 puts in place “pay for performance programs” and goes on to direct that, “Incentive payments shall be based on measured results.” These programs will compensate customers who develop and implement energy efficiency plans based on measured results of those plans. This approach is not new. National Resources Defense Council (NRDC) and The Utility Reform Network (TURN) proposed a similar program to the CPUC in the form of their pay-for-metered performance pilot. Pacific Gas & Electric (PG&E) supported the pilot because of its potential to promote comprehensive upgrades while minimizing implementation costs.

SB 350 is not the only bill shaking up energy efficiency

Though it is getting somewhat less attention, the legislature also passed AB 802 (Williams). In addition to its primary goals of implementing statewide benchmarking across the energy industry and providing access to energy data, this bill also moves the state towards meter-based energy efficiency. It does so by directing the CPUC to incorporate meter-based performance into its goals and budgets. In addition, it instructs the California Energy Commission (CEC) to count efficiency starting from a building baseline rather than energy code (which breaks down a major barrier to energy efficiency).

Taken as a whole, these changes – supported by a surprising group of stakeholders including environmental groups, local governments, industry, utilities, and ratepayer advocates – fundamentally shift California’s approach to energy efficiency. As they come into effect, we will move from a programmatic, regulated approach, to markets which treat energy efficiency as a reliable energy resource. Further, we will rely on private capital and innovation to create the business models necessary to achieve Governor Brown’s goals.

When the Governor signs these landmark bills into law, the state will take a major step forward, creating new opportunity for energy efficiency in California and a model for the rest of the nation to follow.

California’s “big three” utilities are taking important steps toward achieving a clean energy future – one in which we will better utilize renewable sources of energy, give customers more choice and control, and keep the state on course to cut pollution.

One way they are doing this is through Distribution Resource Plans (DRPs). Signed into state law in 2014, DRPs are roadmaps for California’s investor-owned utilities – including Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric – to incorporate more distributed energy resources, like rooftop solar and electric vehicles, onto the grid. Each investor-owned utility in California is required to develop a DRP, and the big three submitted their initial plans on July 1, 2015 – a milestone in and of itself.

Upon analysis, Environmental Defense Fund (EDF) sees the DRPs as a considerable step in the right direction. However, there are aspects of the plans we think could be improved to ensure California’s electric grid is able to take full advantage of already existing and future distributed energy resources.

The potential of DRPs

DRPs include proposed methodologies on how to incorporate clean, distributed energy resources into their business models. In addition, the proposals outline implementation frameworks for each utility’s five demonstration pilots ordered by the California Public Utilities Commission (CPUC). The plans include a directive for the market to dictate which technology solutions provide the greatest value to all customers and drive innovation. Finally, they emphasize the need for continuing electricity rate reform to create a distribution system usable by both service providers and customers.

But the utilities’ plans could do more to fully embrace the potential of DRPs and transform California’s energy system.

These plans could, for example, help utilities create a more dynamic electric distribution system – one that allows for greater levels of renewables while creating new revenue streams. This new system could be capable of knowing where and when these clean, distributed energy resources would be most valuable for the grid and encourage Californians and third parties to invest in them. What’s more, DRPs have the potential to help maintain grid reliability, improve resiliency, increase access to clean technologies, and decrease the use of polluting generation resources.

Room for improvement

To be as effective as possible, remain profitable, and ensure customer adoption, California utilities must focus on four key things with their distribution resource plans:

Integrate more renewables. As California works towards ambitious climate and clean energy goals, more renewable energy resources are increasingly vital. These plans are one way California utilities can ensure they are prepared to utilize all the clean energy resources that are currently connected to the electric grid, as well as future resources.

Align with market conditions. The utilities should strive to create a distribution system that operates as close to market conditions as possible. More and more Californians are starting to produce their own electricity – a core component of the clean energy economy. These customers should have an opportunity to buy and sell electricity in the competitive energy market place in the same way a natural gas power plant would sell its electricity to a utility for distribution to customers. By allowing customers and third parties to make money in this same market, we can further incentivize non-utility players to provide clean, renewable, affordable electricity to the grid.

Open access to data. The two previous points can only be possible with open access to energy data. It is the glue needed to hold this new two-way, clean, distributed system together. While the plans contain more data than previously released about the distribution system, it leaves some important data out. Without more detailed data, utilities have the potential to block out third party participation – groups that are eager to provide distributed energy resources.

Facilitate innovative product design. The pilot program proposals offered by the utilities uniformly identify the importance of adopting performance metrics, and allude to the need for new business models. However, with the exception of one utility, no specifics are included. SDG&E goes beyond the Commission’s guidance to include a sixth proposal focused on examining new business models and opportunities for creating additional revenue streams based on innovative product design. The utility’s “Bring Your Own Battery” (BYOB) model rides the trend of customers bringing their own batteries to the grid, and creates a role for the utility to facilitate this process. It is innovative new ideas like this one that show potential for transitioning to a cleaner, more distributed energy system while maintaining an active and vital role for utilities.

As we know, the first step is the hardest when adopting a new paradigm and much work lies ahead as California’s largest utilities move into the implementation phase of their DRPs. Meanwhile, the goal of developing a performance-based framework that rewards utilities and customers for integrating clean, reliable, affordable energy solutions is now in sight.

Every day thousands of Americans suffer from dirty air – costing the young and old their health, livelihood, and in many cases, their lives. As California is home to the top five most polluted cities in the country, we need action.

Thankfully, after many long hours of debate and negotiations at the state capitol, the California Legislature passed SB 350 (De León) last Friday. The California State Assembly passed the bill, with a 52-26 vote with bipartisan support before passing it on to the senate where it was approved in a concurrence vote. This bill increases California’s renewable energy mix to 50 percent and doubles the energy efficiency of existing buildings. Both of these provisions will serve to combat dirty air and fight climate change, while ushering in a new era for the state’s electricity system – one defined by a cleaner, more resilient, and dynamic electric grid.

Win some, lose some

As many have reported, SB 350 had an additional provision to cut the use of petroleum in California by 50 percent over the next 15 years, an approach that would have reduced the state’s reliance on imported fuels. However, that provision was removed from the bill before being passed out of the legislature. Even without this portion, SB 350 is still a strong demonstration of the state’s dedication to fighting climate change.

Raising the renewable portfolio standard (RPS) is a major yet doable step for California. The state has steadily progressed towards this goal since the legislature passed the first RPS of 20 percent in 2002 and increased it to 33 percent in 2005. With SB 350 pushing it to 50 percent, the proverbial glass is now more than half full with opportunity.

SB 350 will diversify California’s clean energy resources

The increase in the state’s renewable energy production builds on past standards, while also adding exciting new dimensions. Namely, it looks at how to combine renewables with other technologies to build a clean electric grid that will benefit all Californians for years to come.

For example, the existing RPS has been incredibly successful at getting a wealth of solar energy up and running in California. This valuable clean energy resource is available in the middle of the day, when the sun shines its brightest. In fact, California has made solar so abundant that it sometimes outshines demand during the middle of the day, while other resources are required to meet electricity needs in the late afternoon and early morning. This opens up an opportunity for renewables like solar to work with other clean energy technologies to balance supply and demand, building a clean electricity system on a large scale.

To take advantage of this opportunity, SB 350 requires utilities to put together portfolios – using zero-carbon resources as much as they reasonably can through integrated resource planning. In other words, it requires utilities to plan how they will build a truly clean grid. This approach supports a greater role for the use of clean, people-powered resources, including:

Demand response — This energy conservation tool rewards people and businesses for reducing stress on the electric when it’s needed most. By combining energy automation technology, like two-way programmable thermostats and market signals to reduce or increase energy use at key times, Californians can begin to shift their energy use to times of day when clean energy is plentiful. For example, on the hottest day of the year in the middle of the afternoon when everyone’s pumping their AC, utilities can send homeowners a signal to shift non-essential appliance use (like running the dishwasher) to times of day when use electricity is cleaner, like at night when wind energy is abundant.

Electric vehicles —Like mobile batteries, electric vehicles can be used to store renewable energy. Cars charging at an owners’ work place can gulp down solar energy to expend it on the drive home, lowering costs for drivers.

Energy storage — Similar to electric vehicles, energy storage works essentially the same way as traditional batteries. People charge them when power is clean and plentiful, and use them during “peak” hours, when demand and stress on the central electric grid is at its highest.

SB 350 will bring California into a cleaner future

SB 350 also places a greater focus on clean energy in disadvantaged communities and communities of color, often the most affected by pollution from the energy sector. With the combined focus on renewables, integration, and energy efficiency, SB 350 can help Californians manage their energy use and their utility bills, while supporting California’s clean tech sector.

Reducing air pollution and mitigating climate change is an important goal – one that SB 350 can help achieve. California is, for the first time, figuring out how all the building blocks of a clean energy system fit together – renewables, customer-side resources, and other low-carbon resources – and it will set an example for the rest of the nation. SB 350 is the product of extensive, thoughtful negotiations between government, business, and environmental experts across the state. With the support of progressive utilities, like Sempra Energy and other clean energy companies dedicated to delivering clean energy resources to the people of California, these efforts have resulted in the strongest targets in the U.S. SB 350 is now poised to deliver California into a cleaner 21st century.

This summer the California Public Utilities Commission (CPUC) ordered big changes in how Californians will pay for electricity. Starting in 2019, residential customers of the big three investor-owned utilities (Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric) will be switching residential customers to the same pricing plan used by commercial and industrial customers: time-of-use (TOU) electricity pricing. This approach rewards people who shift some of their electricity use to times of the day when renewable energy is plentiful and electricity is cheaper. Before rolling this out to all 33 million Californians, however, the CPUC has instructed the utilities to perform experiments on how best to design and then market TOU pricing to customers.

These TOU pilots – which will begin summer 2016 – are the first steps in the journey toward full deployment, and as with other journeys, the first steps are often some of the most influential.

There is already real-world experience giving us confidence that this move will benefit the vast majority of customers. Nevertheless, testing to improve results before the full-scale roll out is a wise plan. Environmental Defense Fund (EDF) submitted comments last week outlining what we think the pilots should accomplish; below is a summary of those comments.

What the TOU pilots should demonstrate

Greenhouse gas reductions: As I’ve written before, TOU pricing can bring substantial benefits to Californians and the electric grid. This shift in energy demand can help reduce our reliance on fossil fuels to power our homes and workplaces. Therefore, the pilots should demonstrate how TOU pricing can limit greenhouse gas pollution by providing an economic incentive for customers to shift their demand to times when electricity is both cheaper and cleaner.

Electric Vehicle (EV) optimization: The pilots should also show how TOU can make EVs an asset in our pursuit of climate goals. Of course displacing conventional gasoline or diesel cars with electric vehicles avoids tailpipe pollution, but it may exacerbate our use of dirty “peaker” power plants (used only a handful of days a year to provide backup power during periods of “peak” demand). If EVs are not charged wisely, California utilities may end up having to rely more on these peaker plants to manage the increased demand from EVs. But well-designed TOU pricing can help guide EV owners toward the best times of day to charge – both in terms of cost and clean energy optimization. Done right, EVs could be used to store abundant solar and wind-sourced electricity. Done wrong, increased demand from EVs could increase power plant pollution and customer expenses associated with new power plants.

Renewable energy optimization: TOU electricity pricing can also boost the use of utility-scale renewables, once again, by shifting demand to match up with when renewable generation facilities are most productive. This will become increasing valuable in achieving Governor Brown’s goal of 50 percent renewables by 2030 – currently being considered by the legislature in the form of SB 350 (De León).

Avoided infrastructure costs: Finally, the pilots should exhibit how a TOU rate design can avoid costs to the electricity system associated with generation or distribution infrastructure, like power plants and transmission lines. Because TOU pricing will inspire customers to move their demand away from periods of peak energy demand, the utilities should be able to avoid spending money on infrastructure investments typically necessitated by forecasts of ever growing peak demand. These savings ought to be tracked as “avoided costs” attributable to TOU rates and, upon full roll-out of TOU pricing, these avoided costs should be passed through to customers in the form of lowered retail electricity prices.

Opportunities for collaboration

While testing and starting small is prudent, pilots must lead to full-scale action. One way the CPUC can safeguard against delay is to connect pilots to other initiatives happening under its own roof. Coordinating between parallel efforts can create synergies and avoid duplication.

EDF sees value in coordinating the TOU pilots with both the distribution resource planning and the integrated demand side resources (IDSR) proceedings. This June, utilities were for the first time ever required to submit Distribution Resources Plans (DRPs) with the goal of identifying how distributed energy resources – like TOU pricing, small-scale solar, and customer-side energy storage – can be used to benefit the grid. Meanwhile, the IDSR proceeding is focused on how customers can further advance demand-side resources – like energy efficiency – which can be buoyed by TOU pricing.

The CPUC should give utilities clear direction to conduct their TOU pilots with the goal of enhancing and leveraging both the utility demonstrations proposed in the DRPs and the IDSR. For example, innovative, optional time-variant tariffs like TOU should be showcased in the demonstration projects proposed in the DRPs.

The TOU pilots are being developed in the coming months and must be finalized for submission to the CPUC in January 2016. EDF is amongst many who see well-designed and marketed TOU pricing programs as important for spurring innovative, clean, and cost-effective energy solutions. The decisions made now will set a necessary course toward a more empowered and engaged California energy user, and a cleaner California electric grid.